‘Airzim woes of a legacy nature’

problems are?
JK: Thank you George, but let me from the onset tell the nation that the official term of office of the board that I chaired ended on 7 August. However, the minister asked us to hold fort while putting together a new board. But I will now want to distance myself from the goings-on at Airzim since the minister and the permanent secretary are now handling all the issues.

Having been in the system, I will certainly talk of the challenges and what I believe is the long-term solution. The challenges are to a greater extent of a legacy nature. For a long time the airline operated under pressure from price controls, where people would go to China for US$8 and while this was good for the travelling public, it was not good business for the airline as it accrued a huge foreign currency debt.

GC: As a board wasn’t that part of your brief to provide leadership and guidance by coming up with turnaround strategies to keep the airline afloat?
JK: Indeed, you are right but it will interest you to know that on inception as a new board the shareholder asked us to submit a turnaround plan which was accepted and approved. In the plan the airline was supposed to initially retrench 475 employees, but surprisingly the shareholder grew cold feet and shied away. In the end we kept on the airline’s payroll 475 bodies that were not productive. Another 300 employees were also supposed to leave the airline but we could not implement their retrenchment since we still had the first batch of 475. As a board then, our position was that the shareholder should take over the debt saddling the company so that it starts operating on a clean slate.

GC: You refer to foreign debt and other issues, any figures regarding the debt?
JK: There is a debt overhang of around US$125 million, which is a real challenge. What is owed by Airzim is consequently owed by the shareholder, but inspite of all the troubles, we have been working hard to keep the planes in the skies, barring the strike by pilots. The problem with debts is so bad that even NSSA has threatened to attach property. This is turning out to be ugly in that we have a situation where one part of Government is helping to destroy the other part.

GC: There are also concerns over the cost of fuel, which is viewed to have negatively impacted on any turnaround plans your board mooted. To what extent does fuel account for total airline costs?
JK: Fuel supply is a challenge. In fact I believe we have a cartel in the country that agrees on a high price because it is hard to understand why fuel would be much higher here than what we pay in South Africa and even Lusaka. The international price is 65 cents for Jet A1 yet here it is $1,05 per litre. Fuel accounts for between 36 to 40 percent of the airline’s costs.

GC: It is common knowledge that planes are old and is this not the reason why fuel accounts for almost half of the airline’s costs?
JK: There is need to renew equipment. Imagine, the 767 is 20-years-old and the 737-200 is 23-years-old. There is a big disadvantage flying such planes in that they are inefficient in their use of fuel. However, the bodyworks of the planes are still okay. They can fly but generally there is need to renew capital equipment.

GC: How about selling the planes and other assets?
JK: We will recover nothing from selling the planes because to be honest with you they are worth nothing.

GC: So what should be done in the long-term?
JK: The agreed position is that the labour should be streamlined for the simple reason it is too big for the equipment and the destinations that we fly to. There are just too many people at Airzim.

GC: And the strike by pilots?
JK: Discipline must apply to everyone, including the pilots. As a board we had taken a position to discipline anyone who breaks the law, otherwise in the absence of such a measure indiscipline will continue. Because of our erratic flying that we have come to be known for, those that we do business with, including our customers, have lost confidence in us and it will take a big effort to restore it.
For example, the load was one million passengers in 1994, dropping to 266 000 last year. The load will continue to drop until confidence is restored in our airline. People need to be confident that they have an effective and efficient airline to take them home on time and safely, which is not the case at the moment.

GC: So has your board been able to instill discipline in the organisation?
JK: There are instances where as a board we thought of enforcing discipline, especially on the pilots but the shareholder would come up with a different view to let them loose. This constitutes unnecessary interference.

GC: How do you want to see the shareholder being involved in turning around the airline’s fortunes?
JK: The shareholder needs to make a commitment to grow the airline and not simply want to see the planes in the sky. The shareholder must finance and take over the debt. There is need to recapitalise and one area that also needs serious attention is the ICT, which is very weak.

GC: What are your views on the performance of management? Do you think it is up to scratch?
JK: There is need for a real management shake-up to bring competent people, but that is where the problem starts. It will be difficult for the airline to attract such people because of low salaries. As a result we would always get those at the end of the stick.

GC: What about the destinations that the planes fly to?
JK: The destinations and the frequencies are a matter of concern. It is meaningless and costly to fly a plane to China or London and we have it landed for a week or so at the airport, doing nothing. It is indeed a waste of time.

GC: What are the positives that you can talk about emanating for the airline’s operations?
JK: It is important to acknowledge the employees, especially the pilots and engineers who deserve a huge pat on the back for the admirable safety flying record.

GC: What advice would you give to the new board?
JK: As board members we must know that we are the representatives of the principal and we should show greater respect for State institutions by working to the best of our ability.
We should not treat the institutions as our personal business. We should be people who are committed to contribute to national growth and not the growth of individuals. As board members we need to be honest, and diligence is a must in running such enterprises.

GC: If you were asked to appoint the next board of directors, what qualities would you be looking for?
JK: You need people who bring value to the organisation. What is it that they have done in their lives should be an important question. You do not want to have people who see the appointment as an opportunity to increase their wealth, but who see it as a request to offer service to the nation.